Middle East energy export chokepoints

The prospect of a U.S. military strike on Syria has stoked fears that Damascus, or its closest ally Iran, may retaliate against U.S. allies in the Gulf – all leading global oil or gas suppliers.

The Middle East produced 28.27 million barrels a day (bpd), or 32.5% of the 86.15 million bpd of oil produced globally in 2012, according to the BP Statistical Review.

Below are facts about threats to the major energy transit routes of the Middle East and possible alternative routes.

STRAIT OF HORMUZ
The most important oil transit channel in the world with some 17 million bpd, or about 35 percent of all sea-borne oil, passing through in 2011, according to the U.S. Energy Information Administration (EIA).

Most of the crude exported from Saudi Arabia, Iran, the UAE, Kuwait and Iraq – together with nearly all the liquefied natural gas (LNG) from lead supplier Qatar – sails through the narrow channel between Oman and Iran.

Tensions over the Strait have risen since late 2011 as western government efforts to starve Iran of oil revenues have sparked threats from Tehran that it might block the channel.

The U.S. Navy, which leads a large Western naval force in the region, has said it would not allow any disruption to traffic in and out of the Gulf. However, were it to become impassable other routes would be needed.

SAUDI ARABIA

The world’s largest oil exporter ships nearly all its crude oil through Hormuz, mostly to Asia and the United States.

It has also built a 5-million bpd twin pipeline, called Petroline, to transport crude from fields mainly clustered in the east of the country to the Red Sea port of Yanbu.

But because the kingdom now exports oil mainly to Asia, one of those pipelines has been converted to carry natural gas to booming industrial centres in western Saudi Arabia.

Crude supplies destined for Saudi refineries make up about 2 million of the available Petroline capacity leaving little for exports out of Red Sea ports.

After a number of threats by Iran to block Hormuz in early 2012, Saudi Arabia has reopened Iraq’s 1.65 million bpd IPSA pipeline that runs parallel to the Petroline as a back up.

A parallel 290,000 bpd Abqaiq-Yanbu natural gas liquids (NGL) pipeline links gas processing plants in the east with NGL export facilities at Yanbu. But it too provides only a partial alternative to Saudi shipments of NGL from the Gulf.

Saudi Arabia used to pump oil through the Trans Arabian Pipeline across Jordan, Syria and Lebanon to the Mediterranean but since the different legs of the 0.5 million bpd “Tapline” were shut from 1976 to 1990, it has exported most of its crude on tankers through the Strait of Hormuz.

There has been talk of reopening the long Saudi leg of the Tapline to Jordan but it is unclear how quickly a pipeline closed for two decades could be reopened, and there seems little prospect that the leg across Syria could reopen soon.

Saudi energy infrastructure was targeted by terror groups in 2006 but heavy protection has so far prevented major problems.

It has Patriot missile defense batteries positioned across the Kingdom to protect towns and oil installations from missile attacks. But the failure of U.S.-made system to track an Iraqi Scud missile in the Gulf War, resulting in the deaths of 28 U.S. soldiers in 1991, shows missiles can still slip through.

The kingdom is thought to keep some redundancy in its export system as insurance against the disabling of some facilities, according to the EIA. Saudi Aramco refuses to comment on what those options are.

OTHER GULF PRODUCERS

Iran and Kuwait still rely entirely on the Strait of Hormuz for exporting oil, while leading LNG exporter Qatar also exports most of its gas by tanker out of the Gulf.

The UAE opened a 1.5 million bpd pipeline able to carry the bulk of its exports to Fujairah on the Gulf of Oman coast in 2012.

Qatar, a small crude exporter, shipped more than 102 billion cubic metres (bcm) of gas out of Hormuz in 2012, according to BP Statistics, and it has no alternative route for its LNG.

IRAQ

Nearly 80% of Iraq’s crude is exported through Gulf ports, with the rest sent by pipeline across Kurdistan to the port of Ceyhan, Turkey. Ceyhan’s location close to the Syrian border could leave it exposed to attack if the conflict widens.

Iraq’s northern route has a maximum nameplate capacity of about 1.6 million bpd but less than a third of that flows through the link which is frequently attacked by insurgents.

There are plans to increase capacity on the northern route to help cope with an expected rise in production and reduce reliance on the Gulf.

The 0.7 million bpd Iraq-Syria-Lebanon Pipeline has been unusable since the 2003 war in Iraq but could be fixed if the region was more stable than at present.

IRAN

Iran’s total reliance on Hormuz being open is a big deterrent to Tehran trying to block it and the new government has adopted a more conciliatory stance in its standoff with the west over its disputed nuclear programme.

Iran has stopped threatening to interrupt Hormuz shipping since 2012. But Assad’s staunchest ally, which has warned Washington against crossing the “red line” on Syria, may revive its Hormuz threats in response to a U.S. attack on Damascus.

SUEZ CANAL/SUMED

As oil demand growth has shifted to Asia, only around 800,000 bpd of crude oil and 1.4 million bpd of oil products sailed through the Suez Canal in 2011.

But the canal is vital for Qatari LNG exports to Europe and Qatar has become such a key supplier that a disruption to shipping through the canal could cause price spikes in European gas markets and even lead to winter fuel shortages.

The 2.3 million bpd Sumed oil pipeline connecting the Red Sea to the Mediterranean could accommodate more oil in the event of a Suez blockage because it carried only around 1.7 million bpd in 2011, due to weak European demand.